Driver churn continues to plague the industry as the turnover rate at large truckload carriers has reached its highest point in five years. According to the latest data from the American Trucking Associations’ Trucking Activity Report, the annualized turnover rate increased 4 percentage points to 98% in the second quarter.
“So far this year, the turnover rate at large truckload fleets is up ten percentage points,” said Bob Costello, ATA chief economist Bob Costello. “The extreme tightening of the driver market – driven by solid freight demand – will continue to challenge fleets looking for qualified drivers.”
Through two quarters, the turnover rate at large carriers (over $30 million in annual revenue) is at 96%, the highest rate since 2013. Smaller truckload fleets saw a slight decline in turnover rate to 72%.
“There is something happening with turnover at these smaller fleets,” Costello said. “The driver market remains tight across the truckload sector, but the turnover rate at these smaller carriers is down 14 points from the same time last year. Like large carriers, small truckload carriers have been aggressively raising pay this year, which has helped their turnover rate level off.”
Less-than-truckload carriers have also seen their turnover rate climb, rising 4 percentage points to 14% - the highest point since the first quarter of 2013.
The highest all-time recorded driver turnover rate was 136% in 2005, Costello said last month at the ATA’s Economics Conference. He noted that over-the-road fleets continue to have the most problems with turnover.
“While private fleets are having problems with drivers, and they are, and while LTL is having problems with drivers, and they are, they pale [in comparison] to the problem of over-the-road fleets,” he said.
Costello estimated the industry is now short 51,000 drivers on a base of about 500,000 drivers. ATA has predicted that if nothing changes, the industry will be short 160,000 drivers by 2026.
“If we [reach 160,000], we’ll be in a world of hurt,” Costello remarked, “because at some point, you’re not going to see six kinds of apples on store shelves, but you’re going to see three kinds of apples.”
Costello went on to point out that while the general economy has recovered since the recession, trucking has not kept pace in hiring trends. To note, he said that since 2017, manufacturing has added 400,000 jobs and construction has added 420,000 but trucking has grown its employee base by just 30,000 positions, and even that is suspect, Costello thinks.
“I think that number is too high,” he said. “I think our industry has struggled so much that 30,000 is too high because” independent contractors (IC) have been switching to employee drivers for several reasons, including the inability to get equipment.
ICs are not counted as employees in government statistics, so when an IC switches to a company driver, that is technically a new hire, even though it didn’t add any capacity to the network.
Costello noted that improving wait times at shippers can help with this problem through improved driver efficiency. If a driver is able to increase their miles from 8,500 to 9,000 a month, that would result in a net increase in capacity of 5.9% and additional pay for the driver. A boost to 9,500 miles a month is equivalent to an 11.8% capacity increase for that truck.